U.S. patent application number 11/437792 was filed with the patent office on 2007-02-15 for method and apparatus for financial investment advice available to a host of users over a public network.
Invention is credited to Bill Snow, Stephen B. Sutherland.
Application Number | 20070038544 11/437792 |
Document ID | / |
Family ID | 4164951 |
Filed Date | 2007-02-15 |
United States Patent
Application |
20070038544 |
Kind Code |
A1 |
Snow; Bill ; et al. |
February 15, 2007 |
Method and apparatus for financial investment advice available to a
host of users over a public network
Abstract
The investment arrangement funnels the knowledge and strategies
of a host of advisors through an impartial system leveraged by a
host of investors to access, evaluate and then easily invest in one
or more strategies. Investment is made by an investment company
which acts as a holding company for the investor. The advisor
provides instructions to the investment company regarding buy and
sell instructions. The strategy of each advisor is clearly stated
and investments are restricted to the strategy. The investment
company provides a database of all trades by an advisor so that
both actual and relative performance can be measured.
Inventors: |
Snow; Bill; (Toronto,
CA) ; Sutherland; Stephen B.; (Aurora, CA) |
Correspondence
Address: |
Dennison Associates
Suite 301
133 Richmond Street West
Toronto
ON
M5H 2L7
CA
|
Family ID: |
4164951 |
Appl. No.: |
11/437792 |
Filed: |
May 22, 2006 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
|
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09570814 |
May 15, 2000 |
|
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11437792 |
May 22, 2006 |
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Current U.S.
Class: |
705/36R ;
705/35 |
Current CPC
Class: |
G06Q 40/00 20130101;
G06Q 40/06 20130101; G06Q 40/02 20130101 |
Class at
Publication: |
705/036.00R ;
705/035 |
International
Class: |
G06Q 40/00 20060101
G06Q040/00 |
Foreign Application Data
Date |
Code |
Application Number |
Dec 23, 1999 |
CA |
2,293,090 |
Claims
1. A method of establishing and operating a series of unrelated
investment portfolios for investment by independent investors with
each investment portfolio operated and maintained by a common
licensed investment entity, said method comprising providing online
computer access to investment guideline information, specific
limitations of each investment portfolio and with respect to each
investment portfolio, the qualifications of at least one advisor
providing investment instructions to said common licensed entity
with respect to the investment portfolio; providing online access
for any potential advisor to establish an investment portfolio with
said investment entity including said guideline information and
specific limitations upon satisfying a provided standard; providing
online access allowing investors and potential investors research
tools accessing detailed trade information and other financial
information of any of said investment portfolios in a full manner
designed to allow investors and potential investors to complete
their own assessment of the investment portfolio; said investment
entity establishing accounts for investors and allowing investors
to provide instructions to the investment entity to invest in any
of said investment portfolios operated and maintained by said
investment entity; said investment entity providing notice to any
of said advisors of additional funds to be invested in the
respective investment portfolio and seeking instructions with
respect to further investment instructions in accordance with said
specific limitations; said investment entity in accordance with
investment instructions from advisors which meet the specific
limitations investing in said portfolio in accordance with said
investment instructions.
2. A method as claimed in claim 1 wherein said research tools allow
an investor to formulate and submit queries with respect to a
selected investment strategy that include the capability to
investigate the timing of stock trades and the price thereof on an
ongoing basis such that real assessment of the investment strategy
on a current basis can be completed.
3. A method as claimed in claim 1 wherein said investment advisors
receive no financial compensation with respect to the individual
sale or purchase of stock.
4. A method as claimed in claim 1 wherein said investment advisors
receive compensation when an individual investor sells all or part
of his investment according to said strategy and has realized a
profit.
5. A method as claimed in claim 1 wherein said investment advisors
only receive compensation when an individual investor sells all or
part of his investment according to said strategy and has realized
a profit.
6. A method as claimed in claim 1 wherein said investment entity
treats each investment portfolio as a mutual fund maintained by
said investment entity where the investment directions originate
with the advisor and are limited to the stated strategy.
7. A method as claimed in claim 6 wherein an investor who has funds
invested according to a selected strategy receives notice of a
change in strategy before any investment outside the strategy can
be made.
8. A computerized online system for investing in mutual funds or
similar funds, said system comprising a database of possible mutual
funds accessible over a pubic network using a computer, said
database including for each mutual fund a stated investment
strategy to which investments of the fund will be limited, said
database providing financial performance measurements for each
mutual fund and additionally accommodating user defined criteria
associated with any trades of said mutual funds and full details of
said trades for investigating said mutual funds, said online system
accommodating investors opening an account for the purpose of
investing including investing in any of said mutual funds; at least
some of said mutual funds including non conventional advisors
registered with said online system promoting investment according
to their stated strategy and the particular mutual fund is
administered by a licensed entity independent of said
non-conventional advisor and wherein said non conventional advisors
receives information with respect to additional funds received for
investment according to the stated strategy and said advisor
provides instructions to said online system with respect to the
particular investments to be made with the additional funds, said
advisors further providing buy and sell instructions to said online
system to effect management of their respective fund in accordance
with said stated strategy where said licensed entity maintains all
assets of said fund separate and distinct from the respective
advisor.
9. A computerized online system as claimed in claim 14 wherein some
of said non conventional advisors include web pages promoting their
investment strategy and providing a link to said online system.
10. A computerized online system as claimed in claim 9 wherein said
online system is operated by a licensed broker.
11. A computerized online system as claimed in claim 10 wherein
each advisor receives compensation based on an investor selling the
particular mutual fund and realizing a profit.
12. A computerized online system as claimed in claim 10 wherein
said advisor does not receive any compensation with respect to the
purchase or sale of investments for the fund.
13. A computerized online system as claimed in claim 12 wherein
said system, if acceptable, accommodates modification of any
strategy by the particular advisor after appropriate notice to any
investors in said fund.
14. A computerized system as claimed in claim 10 wherein investors
and said advisors access said online system over the INTERNET or
other public digital network.
Description
[0001] This is a Continuation Application of U.S. patent
application Ser. No. 09/570,814 filed in the United States Patent
Office on May 15, 2000.
FIELD OF THE INVENTION
[0002] The present invention relates to a method and system for
receiving and considering investment advice and investing in
accordance with such investment advice.
BACKGROUND OF THE INVENTION
[0003] The present application is directed to a financial
investment system which is available to a host of users over a
public network.
[0004] The INTERNET has introduced new ways for carrying on
business and provides individuals with a simple procedure for
investigating new purchases. Webpages have replaced physical places
of business and also act to market the particular wares or services
of particular companies and individuals. Such webpages typically,
are freely available to anyone having a computer and INTERNET
access. The wide access to a host of potential clients and the
ability to inexpensively provide detailed information to such
clients has changed the way business is conducted.
[0005] Investors now have the capability of tracking their
investments over the INTERNET as well as conducting research and
providing instructions with respect to trades through online
brokers. An investor can research a host of different mutual funds
which all allegedly reduce the investment risk due to
diversification. These mutual funds are managed by an advisor or
fund manager and provide an effective investment vehicle,
particularly where the amount to be invested is small. A certain
fee is paid by the investor for the professional expertise provided
in the administration and investment direction of the fund. The
individual investor does not have any control of the fund other
than whether to invest or divest themselves of the particular fund.
The amount of timely information that is available with respect to
actual trade activities of the fund is limited and summarized.
Therefore, the actual day to day decisions of the fund manager are
hidden and difficult, if not impossible, to evaluate.
[0006] A different form of investing is direct purchase of stocks
through a broker or electronic discount brokerage service. In the
case of a broker, the stock selection is ultimately determined by
the investor but this decision is often made based on the broker's
recommendation. Research can be provided to assist the investor in
evaluating the recommendations. Independent third party tracking of
the particular advice provided by the broker is not normally
available and thus, it is typically up to the investor to record
and maintain such data. This requires considerable discipline and
typically is inaccurate over time.
[0007] Another issue with respect to a broker is the possibility of
"churn", which refers to the practice of buying and selling stocks
for the primary purpose of increasing commissions without
necessarily creating additional value for the investor.
[0008] This practice is difficult for the individual investor to
evaluate and leads to increased uncertainty.
[0009] Investors are often influenced by "a hot tip". The "hot tip"
may originate with a friend or colleague who is recommending a
particular stock. On occasion, brokers also contact investors
recommending a particular investment. Nervous or careful investors
may be concerned due to a possible conflict of interest. It would
be desirable to have historical data with respect to the
performance of the broker's recommendations over time. Similar
tracking of the performance of a colleague's previous
recommendations would be desirable to assist the investor in making
a sound financial decision. Further, there is no independently
audited information as to whether the provider of such "hot tip"
actually acted on his/her own advice. In fact, it has been an
investment industry practice to specifically deny any correlation
between advice and actual trading activities. In some cases, a
broker may be recommending to buy a given stock while his/her
brokerage is in fact selling.
[0010] Some investors group together and form a stock club and
purchase investments on their group's behalf. It would also be
desirable for individual club members to be able to consistently
evaluate the stock club's performance relative to other investor's
funds and to provide a more convenient vehicle for individual
members of the club to join or leave in an equitable manner.
[0011] The present invention addresses a number of these problems
and provides a different method and system for investment.
SUMMARY OF THE INVENTION
[0012] The present invention is directed to an online investment
arrangement. The arrangement includes a series of advisor webpages,
where each webpage promotes a particular investment strategy that
will be followed by a given advisor. Each advisor webpage provides
a link to a corresponding webpage of an investment entity. The
webpage of the investment entity includes a certified definition of
the investment strategy that has been selected and allows an
investor to invest according to the stated strategy while
maintaining the advisor in a capacity of guiding the investing
decisions in accordance with the stated strategy. In this way, an
account is established for each investor and funds are invested in
one or more selected investment strategies.
[0013] According to an aspect of the present invention, an online
investment method comprises the steps of an investor viewing, using
a computer, a host of investment strategies promoted by self
proclaimed advisors, selecting using the computer, a particular
investment strategy for investing, receiving information at the
computer from a licensed investment entity providing confirmation
of the investment strategy and requiring information necessary for
investing according to a selected investment strategy, transmitting
using the computer the required information for investing and
providing the funds necessary for investment to the investment
entity. The investment entity invests according to the strategy on
behalf of the investor.
[0014] A computer online investment system, according to the
present invention, comprises a host of investment advisors of
widely varying backgrounds and experience. These backgrounds and
experience are not limited to conventional mutual fund advisors.
Each investment advisor makes available by an online computer
system, their investment strategy and limitation with respect to
future investments, their qualifications or justification for the
basis of the investment strategy together with a computer link to
an investment company. The investment company is qualified to open
and maintain accounts for investors and to purchase and hold
investments or shares in investments on their behalf. The
investment company includes the capability to invest for an
investor according to a selected investment strategy taken from the
investment strategies of the advisors when so instructed by the
investor.
[0015] The investment company seeks instructions of any advisor
with respect to the investment of additional funds available from
new investment instructions received from investors that selected
the particular advisor's strategy. The company invests according to
the instructions received from the advisor given that the
instructions comply with the stated investment strategy and
limitations of the advisor.
[0016] According to an aspect of the invention, the investment
company operates an online computer system available to the
investor and each advisor's strategy is available on said system as
well as financial research data to assist in the assessment of the
strategy over time.
[0017] According to yet a further aspect of the invention, the
online computer system includes historical investment information
with respect to any of the investment strategies, to allow
independent evaluation of the strategies by an investor prior to
investing.
[0018] According to yet a further aspect of the invention, the
historical investment information includes detailed stock trade
information and timing thereof relative to the current prices,
volumes, and highs and lows over arbitrary periods commensurate
with such stock trades.
[0019] According to yet a further aspect of the invention, the
online computer system allows an investor to submit queries with
respect to a selected investment strategy, which queries include
the capability to investigate the timing of stock trades and the
price thereof on an ongoing basis such that real assessment of the
investment strategy on a current basis can be carried out.
[0020] A computerized online system for investing in mutual funds
or similar funds according to the present invention, comprises a
database of possible advisor funds accessible over a public network
using a computer. The database includes for each advisor fund, a
stated investment strategy to which investments of the fund will be
limited. The database provides financial performance measurements
for each advisor fund and additionally, accommodates user defined
criteria associated with trades of the advisor funds for
investigating the advisor funds. The database also includes a link
back to the advisors' webpages and may also store historical copies
of the advisors' pages so that potential investors cannot only view
the current narrative of the advisor but can also review prior
narratives.
[0021] According to yet a further aspect of the invention, an
advisor may instruct the investment company to cap the fund thereby
preventing new investment investors from joining. This might be
regarded by an advisor to ensure that the overall size of a given
fund does not make it difficult to quickly move in and out of
security postings in small cap stocks, for example.
[0022] The online system preferrably includes a series of
performance evaluation tools which the investment company has
developed to assess the performance of different advisors.
[0023] The online system accommodates investors opening an account
for the purpose of investing, including investing in any of the
mutual funds. At least some of the mutual funds include non
conventional advisors promoting investment according to their
stated strategy. The non conventional advisors receive information
with respect to additional funds received for investment according
to their stated strategy and the advisor provides instructions to
the online system with respect to the particular investment to be
made with the additional funds. The advisors further provide buy
and sell instructions to the online system to effect management of
their respective fund in accordance with the stated strategy.
[0024] The non conventional advisors may also specify a
proportional portfolio strategy whereby they specify a selection of
companies and a corresponding percentage range that the volume of
each equity should comprise of the total funds available. The
investment company will adjust through automatic buy and sell
orders, the portfolio such that the investment strategy is
upheld.
[0025] According to yet a further aspect of the invention, the
computerized online system includes some of the non conventional
advisors having separate webpages promoting their investment
strategy and providing a link to the online system.
[0026] According to yet a further aspect of the invention, the
online system is operated by a licensed brokerage.
[0027] According to yet a further aspect of the invention, each
advisor receives compensation based on investors selling the
particular advisor fund and realizing a profit.
[0028] According to yet a further aspect of the invention, each
advisor receives an incentive bonus from the investment company if
such advisor invests his/her own money in the particular advisor
fund he/she is advising. If the advisor makes it known to investors
that he/she was his/her own fund, such investors will be given an
opportunity to automatically sell out of such fund if such advisor
removes his/her personal monies from such fund. If the investment
strategy is provided by an "automated" system, the investment
company pays no advisor's fees.
[0029] According to yet a further aspect of the invention, the
advisor does not receive any compensation with respect to the
purchase or sale of investments for the particular fund. With this
arrangement, the advisor is separated from any transaction fees
associated with the buy and sell of stock according to his
recommendations, and as such, does not have a conflict of
interest.
[0030] According to yet a further aspect of the invention, the
system may accommodate modification of any stated strategy by a
particular advisor, after appropriate notice has been provided to
the investors in the fund. Basically, any modification of a
strategy will require agreement with the operator of the online
system who provides appropriate notice to the investors.
[0031] According to yet a further aspect of the invention, the
advisor or investment company can decide who may receive
information about the investment strategy, and who may
correspondingly invest in such strategy. This accommodates limited
or private advisor funds.
[0032] According to yet a further aspect of the invention, some of
the advisors are provided by the online system with a specified
fictitious dollar amount to be invested by the advisor and
identified to would be investors as fictitious. This allows the
advisor to establish a track record for his investment strategy
without actual dollars being invested in the fund. In this way,
advisors can gain recognition without full funding.
BRIEF DESCRIPTION OF THE DRAWINGS
[0033] Preferred embodiments of the invention are shown in the
drawings, wherein:
[0034] FIG. 1 shows an online computer based investment system
which uses the INTERNET to allow investors to review investment
strategies of different advisors and to evaluate the performance of
the advisor's strategy including trade executions;
[0035] FIG. 2 shows a webpage of an advisor promoting his
particular investment strategy;
[0036] FIG. 3 shows an opening webpage of the online system which
is accessed by a would be investor;
[0037] FIG. 4 shows a general overview of an investor and advisor
and the online system;
[0038] FIG. 5 shows additional details of the online system;
[0039] FIG. 6 shows the relationship of the investor, advisor and
the online system;
[0040] FIG. 7 shows further details of the system;
[0041] FIG. 8 is an example of a webpage summary of an advisor
maintained by the investment company;
[0042] FIG. 9 is an example webpage of an advisor that is
maintained by the advisor separately;
[0043] FIG. 10 is a webpage showing example fund restrictions which
might be specified by an advisor when creating a fund with the
investment company; and
[0044] FIG. 11 is a webpage report from the investment company
showing a particular investors' portfolio and the security exposure
of the collective portfolio.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS
[0045] FIG. 1 shows an overview of the investment system 1. This
system allows a diverse group of advisors to use webpages to
promote their investment strategy and a much larger diverse group
of investors to review these strategies and make informed
investment decisions. The system recognizes that the expertise of
advisors is quite diverse and individual investors can benefit from
this knowledge if it is provided to them in an effective manner.
The system allows both the advisors and the investors the benefit
of using a licensed brokerage or other qualified company as an
intermediary between an advisor and the investor. Any investments
are protected and the advisor merely provides investment
instructions. The brokerage service in contrast is not recommending
any of the investment strategies and is not confirming the
qualifications of the advisors or their promotional statements.
However, the brokerage does ensure that the investment strategies
of each advisor are adhered to and that no investments will be made
outside of the strategy. In addition, the stocks or investments
purchased according to the fund are held by the brokerage on behalf
of investors.
[0046] The system of FIG. 1 uses the INTERNET or other network for
allowing investors to consider and research different investment
advisors who are promoting their investment advice. The advisors 2
are linked by a computer or otherwise arrange for an advisor
webpage 6 to be available on the web.
[0047] The advisors are responsible for the content of their
webpages 6. These advisor pages link 8 to a series of corresponding
webpages 33 maintained by the investment company. These webpages 33
carry factual current performance and historical data, concerning
advisor funds, certified by this investment company. Each webpage
33 is preferrably of a standard type format which is determined by
the investment company and contain links back to their company
advisor webpages 6.
[0048] The individual webpages 6 of the advisors could be
consolidated in one place, however, in most cases, they will be
provided on separate servers determined by the advisors and paid
for by the advisors. As noted above, they include a link 8 to the
computer server 10 of the investment company and specifically, to
the webpage 33 maintained for each advisor by the investment
company.
[0049] Individual investors, using their computers 4, can logon the
system and either review individual webpages 6 of different
advisors, certified webpages 33, or can query the computer system
10 of the investment entity. This computer system allows for
extensive database evaluation which is shown as including
investment evaluation 14 and advisor evaluation 16. In particular,
the database 12 can be queried by potential investors, and/or
actual investors to review and consider investments. The database
could be queried to rank different advisors or to allow evaluation
of one advisor according to a particular strategy. For example, if
an investor was considering investing according to the investment
strategy of a particular advisor, he could review the actual trades
made by that advisor over the last several months and in
particular, look at buy and sell points of different stock
purchases or transactions that were made by the advisor, relative
to the daily, monthly, or yearly performance of the stock. Did he
buy low and sell high?
[0050] The entire database can be evaluated using general criteria
determined by the potential investor and advisors and selections
which meet the particular criteria can be displayed. For example,
an investor may wish to look at any advisor where there has been at
least a 20 percent return over the last three months and the fund
includes at least two of six possible stocks. The database will
have extensive detailed information with respect to the actual
trades made by the individual advisors and the timing thereof. This
is in direct contradiction to conventional mutual funds where it is
difficult to determine precisely, when stocks have been added and
whether they were added as "window dressing" near the end of a
reporting period. Furthermore, the actual trades with respect to
stocks and the timing thereof, are not typically provided by
conventional mutual funds.
[0051] With the system as described above, it will be possible to
have not only evaluation of relatively recent and new investment
strategies of different advisors, but it will also be possible to
see their performance over time. This will allow an advisor who can
start with an extremely small fund (i.e. low capitalization) to
gain reputation and as the reputation increases due to potential
investors having access to his actual performance results,
additional investors will commit to his fund. The investor has the
assurance of the investment company that the investment strategy
stated by the advisor will be adhered to and investments will not
be made outside of the investment strategy. Furthermore, the
investor's funds are held with the investment company and not with
some unknown advisor.
[0052] In some cases, particularly with relatively new advisors,
the investment company may provide them with a false or fictitious
designation of funds for investment. This will be clearly
identified to all would be investors but it will allow an advisor
to manage a fictitious portfolio according to his strategy and as
such, gain reputation with respect to potential investors. There
will also be a full break down between the fictitious funds and the
actual funds as this may well be critical information to the
investor. The information will also preferrably include the amount
of personal funds or a minimum level of investment that the actual
advisor has in the fund. This may be stated as a dollar amount, a
range, a percentage of the advisor's net worth or personal
investment portfolio.
[0053] In one embodiment of the invention, the advisor will not
receive compensation in a traditional manner. Mutual funds
typically include some sort of management fee which is based on the
net asset value of the fund and not strictly or predominately based
on performance. It is seldom that a stock in a company goes to
zero. Therefore, the net asset value of the fund allows for
substantial fees even with poor performance. Traditional mutual
funds are also typically controlled by a company that the fund
manager is employed by. This raises concern that trades may be made
to generate brokerage fees, as opposed to increase the likelihood
of profit for the individual investors. Furthermore, professional
fund managers move from fund to fund, or fund management company to
fund management company, without giving advance notice to
investors. In a preferred embodiment of the invention, there would
be no possibility of an advisor leaving his/her fund without
advising the investment company, who would immediately notify
investors, then close down the fund by selling all equity.
[0054] In contrast to the above systems, in a preferred embodiment,
the advisor is paid if his investment strategy is successful and
individual investors have profited. The advisor will not primarily
receive compensation with respect to the asset value of the fund
being managed, nor would there be compensation on actual sales or
transactions. Thus, the concern with respect to "brokerage churn",
is not in the interest of the investor and is not in the interest
of the advisor. The advisor preferrably receives compensation if an
investor decides to divest themselves of the particular fund and
has realized a profit. If the investor divests himself of the fund
and has not realized a profit, there would be no compensation. This
arrangement is preferred as the only compensation, or at least the
overall dominant compensation for an advisor managing the fund. An
advisor may receive some compensation or incentive if new investors
decide to invest.
[0055] The investment company preferrably will treat each
investment strategy as a mini advisor fund. New investors will be
issued shares or portions of shares in the advisor fund according
to the dollars invested. The investment company will manage the
advisor fund in accordance with instructions received from the
advisor and in accordance with the stated strategy of the
advisor.
[0056] The investment strategy of each advisor is available in the
investment company database. The individual investors will have
confidence in the investment company for maintaining these funds as
they will be properly qualified and licensed to carry out such
transactions. Trust is built up with respect to the investment
strategy based on financial performance. Some degree of trust is
also generated based on the qualifications of the advisor as stated
on his particular webpage. For example, one advisor might have
significant expertise with respect to corn, as he is a farmer who
specializes in this particular crop. His strategy may be to invest
in corn or corn futures, or other agriculture products of his
choice. The investor who reviews this advice, not only can review
his expertise but can also review how his strategy has performed to
date, has performed in recent times, and on the investment company
database, can study recent trades or all trades of that particular
advisor. The investor can also have some comfort in that the
advisor profits on the basis that individual investors profit, and
payable when such investors realize a profit.
[0057] The advisors have the very significant benefit of having
their investment strategies reviewed and considered by a host of
potential investors who would otherwise be unavailable to them. The
provision of the system to allow an advisor to manage a portfolio
which has not been funded but is basically funded by a fictitious
amount, also allows a would-be advisor to gain reputation that may
attract investors to his advisor fund. The investors will be able
to accurately and fully evaluate the performance of a particular
advisor, essentially on a real time basis. The advisors will be
encouraged to highlight their successes, as well as explain the
particular purchases that were not successful. This type of
explanation will preferrably be available on the individual
webpages of the advisors as opposed to the database of the
investment company, unless they are included in some significant
comments of the advisors that are maintained on the investment
company database.
[0058] In one embodiment of the invention, the investment company
takes "snapshots" 34 of the advisor's personal webpages 6 and
stores them in a secure fashion so that potential investors can
also look at historical promotional, and other commentary from the
advisor. This is in contrast to typical brokers who often
conveniently forget past comments or targets.
[0059] From the above, it can be understood that an investment
system has been disclosed which has advantages with respect to
clearly stating investment strategies of particular advisors as
well as providing effective performance evaluation tools for
investigating strategies over time and based on criteria determined
by preferrably the investors. This investigation includes detailed
trading information. A distinctive break between the fund advisor
and the stock trading broker (investment company) has been made.
The investments of the advisor funds are through a licensed or
qualified agency and the stock transaction fees can be low, as the
advisors are providing the investment advice. The actual investment
strategy is being provided outside the brokerage firm and as such,
there can be no conflict of interest or at least the conflict of
interest has been very significantly reduced. The individual
investors still have the confidence of dealing with a recognized
licensed investment company and each investor has also been
provided with research tools which allow full evaluation of
different investment strategies.
[0060] The investor who is confronted with a "hot tip" from a
friend or colleague can ask his friend or colleague whether he
indeed has an investment strategy that has been identified on his
webpage and recorded with the system. If he does not, the investor
can suggest that this would be a valuable tool to allow would be
investors to more fully consider his investment advice. Similarly,
if a broker cells with particular recommendations, it would be
encouraging to have their recommendations provided on a webpage for
evaluation. Given that in each case, the investor is being asked to
trust the investment advice, it seems only reasonable that this
advice should be evaluated over time as opposed to on a one off
basis. The investor can also suggest that this would be valuable in
that if an advisor recommends a particular stock to the investor,
the investor would also like to rely on the advisor to know
specifically when to sell the stock. As opposed to buying the
particular stock, the investor can buy into the fund of the
advisor. With this approach, the investor will automatically invest
in new "hot picks" of that particular advisor, assuming they meet
the strategy as stated, and will also automatically benefit when
the advisor sells the stocks at the appropriate time without fear
that such advisor will forget to tell the investor when to
sell.
[0061] The proposed system also allows investment clubs to
effectively manage their portfolio. The individual members of the
club can be purchasers in the "advisor fund of the club" with the
advice of the club clearly stated and managed through the
investment company. In some cases, it may be desirable to keep this
strategy confidential or limited to a number of users and this is
also easily accomplished and possible, according to the present
strategy. Similarly, an advisor of very significant reputation may
also wish to restrict purchases in his directed advisor fund. This
system also recognizes there are a host of experts who have
particular expertise in a certain field which has assisted them in
making wise decisions. This system allows them the opportunity to
offer this expertise to others and profit should the investors
realize a profit.
[0062] The system will highlight the strong performers and will
certainly expose the unprofitable investment decisions. Poor
investment strategy over time will be very apparent. Any party who
is indeed providing profitable investment advice over the long term
can benefit from hosting a particular webpage. Investors can review
the investment strategy with respect to recent trades as well as
performance over time in both rising and falling markets.
[0063] FIG. 2 shows a webpage 40 of an advisor. This includes a
sales promotion written by the advisor 42, as well as links to the
investment company's certified portfolio details of the advisor
investment strategy with the stated restrictions. Additional
background information such as a testimonial section and a risk
assessment may also be provided. At a minimum, the webpage includes
a hyper link 8 to the investment company computer 10, and
specifically to the page 33 maintained by the investment company
containing certified factual information. In all cases, it will be
clear to an investor which pages are providing certified
information by the investment company and which pages have been
allowed by the advisor or by other promoters of the advisor's
fund.
[0064] FIG. 3 shows a typical initial webpage of the investment
company. It provides a number of selections that can be made to
either query the database in general with respect to all advisors
or a selected group of advisors, or to select a particular advisor
and to query the success of the strategy of that advisor. There are
also provisions to indicate that an account is to be opened, or on
account status is to be obtained. An area is also provided that
allows an existing customer to carry out an account transaction, or
to effect trade execution.
[0065] FIG. 4 provides a further overview showing the investor, the
advisor, the advisor's webpage, and the computer of the investment
company. It is seen associated with the trading network.
[0066] FIG. 5 shows further details with respect to coordination of
the advisor with respect to the investment company. The ability of
the investor to review his own portfolio and provide instructions
as well as the hyper link from the advisor's webpage to the
system.
[0067] FIG. 6 is a simplification showing one investor, one
advisor, the investment company and the trading network.
[0068] FIG. 7 is again an example of the various advisors and
investors coordinated over the INTERNET and connected to a central
processor of the investment company.
[0069] FIG. 8 is an example webpage 33 of the investment company
providing information with respect to the advisor fund of Bill
Snow. The graph shows the performance of this particular advisor
fund, the average of INTERNET sector funds, and the average of all
funds over time. Other fund information is provided as well as the
capability to investigate the performance of the fund. This
information includes current and past trade executions. This
information is easily produced or maintained by a computer database
system making the information conveniently available for the host
of advisor funds.
[0070] FIG. 9 is a sample webpage of an advisor "Joe" explaining
why he can outperform the market with his stock picks. The
investment company webpage for "Joe" would merely provide the type
of information found in FIG. 8.
[0071] FIG. 10 is a webpage that allows an advisor to define a
particular fund. The advisor of the fund is encouraged to restrict
the fund and thus, restrict the advisor. This provides the
potential investors with a higher level of confidence as they
probably do not know the advisor but may agree that his restricted
investments look good.
[0072] Returning to FIG. 1, it can be seen that the computer system
10 of the investment company also allows coordination 18 with the
various advisors. It also allows coordination with the individual
investors shown as 20. The coordination with the advisors is
necessary to allow the investment company to obtain instructions
from the different advisors with respect to the direction of his
fund. For example, when additional funds are allocated to be
invested, according to a particular investment strategy, the
advisor may receive detailed information with respect to the amount
of funds that should be invested and can provide instructions that
meet his investment strategy to the investment company. In some
cases, the advisor may wish to merely maintain a particular
investment strategy by increasing the number of shares of the
previously identified stocks. Other funds could be indicated as
being placed on hold, awaiting the advisor's instructions or the
advisor could have standing instructions with respect to investment
of additional funds. In the event that investors withdraw funds,
the advisor can also post instructions as to which stocks are to be
sold first, and at what proportions.
[0073] The present system has been described as a host of advisor
funds which are maintained by the investment company on behalf of
the individual investors. An investment of a particular investor is
made by the purchase of shares of the advisor fund. The investor
can be provided with a clear indication of any front end costs to
enter this investment. For example, it may be appropriate that
particular investor is charged with the transaction fees which are
necessary to obtain further purchases in the fund. In this way,
existing investors are not paying for the additional purchases of
stock merely to bring in an new investor. These types of costs can
be stated to the investor over the web at the time he wishes to
make his investment, he can review these costs and decide whether
the investment should go forward. Other arrangements are
possible.
[0074] The present system also allows for immediate investment by a
new investor based on a credit card authorization.
[0075] The description of this system based on a series of advisor
funds is not the only embodiment. There may be other embodiments
that meet the criteria of different licensing regulations and these
are also acceptable. The term "advisor fund" has been used merely
to indicate a mutual fund type operation but it is not limited to
this case. It can be appreciated that all funds may not operate in
the same manner. There can be a host of investment advisors and the
advisors merely put forth their particular expertise and individual
investors decide whether this would be a good investment decision.
The investment strategy of the advisor is clearly stated and
recorded with the investment company. Thus the investor is assured
that the advisor cannot suddenly decide to divest himself of all
his blue chip stocks and decide to invest in some investment which
was not previously identified without notice of a change in his
strategy.
[0076] Furthermore, "automated" advisors, which are computer
algorithms for selecting stocks based on clearly defined criteria,
are also possible under this invention.
[0077] The invention also allows for the definition of investment
strategies by "automated advisors". In those cases, the advisor is
not a person or group, but is instead, a computer generated or
general industry generated "expert". For example, an "INTERNET
Casino Fund" would be automatically generated as equal proportions
of all INTERNET based casinos, or casinos weighed by market
capitalization, or by sales. Similarly, a "Halifax Economy" fund of
all stocks in Halifax could be automatically generated.
[0078] The system is particularly designed to take advantage of the
benefits of the INTERNET and investors preferrably will be
contacted by e-mail. Notice of potential changes to the investment
strategy, for example, can be sent to the individual investors and
such investment strategy will not be adopted until a certain period
of time has expired. If an investor is not satisfied or is
concerned with respect to the risk that this change in direction
may bring, he can divest himself of the fund prior to the change in
strategy, being implemented.
[0079] This invention also allows for investors to be notified as
soon as a transaction occurs in any advisor fund they are
participating in, or monitoring. Criteria for automated generation
of such e-mail or other notification (paper, etc.) might include
buying or selling of any equity, buying or selling of a
specifically identified equity, selling any equity at a loss or
gain, or a loss or gain greater than a certain percentage.
[0080] Rather than viewing his/her portfolio as a series of
investments in advisor funds, an investor could also see the net
results of all advisor funds. Such net results could show total
holdings of each stock (or other investment) broken down by advisor
fund and daily, weekly, monthly or yearly trades. A breakdown for
one investor is shown in FIG. 11. The first table provides a
listing of three separate advisor funds with their current value,
book value and day change. The second table is a collection of the
portfolio listing the top five security exposures. This provides a
useful tool to determine whether the collective portfolio is over
exposed to several securities or is well diversified.
[0081] Although various preferred embodiments of the present
invention have been described herein in detail, it will be
appreciated by those skilled in the art, that variations may be
made thereto without departing from the spirit of the invention or
the scope of the appended claims.
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